CRA confirms that a FITL does not increase the s. 88(1)(d) bump

The starting point for computing the s. 88(1)(d) “bump” on the winding-up of a subsidiary into its parent is the excess of the adjusted cost base of its shares over its net tax equity, which is reduced under s. 88(1)(d)(i)(B) by any “obligation of the subsidiary to pay any amount.” CRA has confirmed that a future income tax liability as shown on the balance sheet of the subsidiary is not such an obligation, simply stating that a FITL is not “a legal obligation to pay an amount.”

Neal Armstrong. Summary of 2015-0617771E5 F under s. 88(1)(d)(i).